VALUE INVESTING and BEHAVIORAL FINANCE
Presentation by Christopher H. Browne
to
Columbia Business School
Graham and Dodd
Value Investing 2000
November 15, 2000
My partners and I at Tweedy, Browne have in the past been skeptical of academic studies
relating to the field of investment management primarily because such studies usually resulted in the
birth of financial paradigms which we believe have no relevance to either what we do or to the real
world. A whole body of academic work formed the foundation upon which generations of students
at the country’s major business schools were taught about Modern Portfolio Theory, Efficient Market
Theory and Beta. In our humble opinion, this was a classic example of garbage in/garbage out. One
could have just as easily manipulated the data to show that corporations with blue covers on their
annual reports performed better than corporations with green covers on their annual reports.
Although none of the three of us was fortunate enough to have studied under the late Dr. Benjamin
Graham when he taught at Columbia Business School, we were fortunate enough to have observed
some of his best students who either worked at or were customers of Tweedy, Browne from the late
1950s through the present. Tom Knapp, who was a partner at Tweedy, Browne from 1958 until the
early 1980s, both studied under Ben Graham and worked for Ben’s investment firm, The Graham-
Newman Corporation. Walter Schloss, another alumnus of Graham-Newman, has made his office at
Tweedy, Browne since he set up his private investment partnership in 1955. Still going strong at 84
and still housed at Tweedy, Browne, Walter has what we believe is the longest continual investment
record of any individual in our field. Among others, Warren Buffett was a frequent visitor to
Tweedy, Browne in the 1960s and early 1970s. My father was the primary broker for Warren in his
purchase of stock in Berkshire Hathaway, and I can remember posting trades in Berky at $25 per
share when I s